By Rob NicholsFor all the acrimony and tension—from impeachment to trade conflicts to a seemingly endless presidential election—that seems to be defining our capital these days, it may come as a surprise to many people in this country that Washington, D.C., has quietly been producing some smart, commonsense banking policy.
How have we managed to see significant progress on banking issues in such a divisive atmosphere? And—as I’m often asked by bankers when I’m speaking at industry events—what does this mean for banking as the 2020 elections approach?
The truth is that our policy victories have been in areas where ABA and our members have forged bipartisan coalitions. We’ve won where we’ve brought fact-based light instead of partisan heat, and we’ve made gains where we’ve been able to find common ground. It’s helped that we have pursued commonsense policies that benefit the country, not just banks. We’ve also been successful by choosing to engage both with lawmakers we often agree with and some we don’t, helping them separate fact from fiction. That’s exactly the same strategy we’ll pursue in 2020.
No matter who holds the gavel in Congress or controls the White House after the election, we will do everything we can to make sure they understand banks and bankers today and the critical role our industry plays in the economy. We will continue working closely with leaders and lawmakers on both sides of the aisle and in both chambers to educate them on issues that are affecting bankers’ ability to serve their customers and communities. We will need your help every step of the way.
A year of bipartisan accomplishments
Last year was the third year in a row of significant policy progress for the banking industry. On the heels of the enactment of two historic bills—tax reform in 2017 and financial regulatory reform in 2018—policymakers continued to advance commonsense policy solutions to address real problems identified by ABA and our member banks.
In September, nearly three-quarters of the House voted to pass the SAFE Banking Act, which would provide a legislative solution to the legal limbo surrounding cannabis banking. It’s rare to see such a big bipartisan majority for any controversial bill, much less a marijuana-related bill.
Here’s how it happened. Bankers and state association executives in states that first legalized marijuana took the lead in educating their peers and lawmakers on the implications of leaving the cannabis industry unbanked. Those include the tax consequences, the public safety risks, and the impact on non-cannabis bank customers caught in the middle. They saw first-hand how the disparity between state and federal laws on cannabis have created untenable risks for local communities, and they contributed to a grassroots bipartisan majority to address the problem. I’m proud of the fact that the lawmakers most responsible for the legislation cite ABA’s support as a key turning point for a bill that had previously gone nowhere. We still have work to do to get this legislation over the finish line, but I’m confident that common sense will prevail in the end.
The next month, another bipartisan House majority passed legislation to modernize how law enforcement and the banking industry collaborate to combat money laundering and prevent financial crimes. The legislation would create a beneficial ownership registry run by the government that banks will use to verify that business customers are not shell companies for bad actors—something we have been advocating for years. It will make compliance easier for banks, and most importantly, it will keep our country safer. There is solid, bipartisan support for a companion bill in the Senate as well.
Throughout 2019, we also saw regulatory action on several other priorities, from implementing key sections of S. 2155, which made tailoring of regulation the law of the land and finalizing the new community bank leverage ratio, to raising the appraisal threshold for residential real estate transactions and proposing changes to the FDIC’s national rate cap regulations.
ABA has been proud to work alongside our members and state association partners to bring about these positive changes. With your help, we will see more this year, including the first modernization of CRA rules in two decades and a much-needed refresh of regulations on brokered deposits. ABA will also continue partnering with the state bankers associations to address the many ways that credit unions and the Farm Credit System use their tax advantages to go beyond their missions. We will remain active in every avenue to stop the unfettered growth of credit unions.
One striking thing about the Democratic presidential debates over the last few months is how infrequently banking comes up as a topic. We have heard a lot about climate change, health insurance, immigration and foreign policy—not to mention wine caves—but there’s been very little on banking. It’s a far cry from previous campaign cycles in the wake of the financial crisis.
It’s an indication of the progress we have made as an industry over the last decade, and I think there are a couple of key reasons behind the change. First, banks remain extraordinarily well-capitalized and much better positioned to withstand an economic downturn. Those assessments come directly from regulators.
Second, however, is that bank customers are happy with their banks. In 2019, public sentiment about the banking industry reached a 12-year high—and the percentage of Americans who think “very positively” about the industry reached its highest point ever. This is because customers see first-hand the role that their banks play in keeping their money safe, facilitating convenient transactions and serving their communities’ financial needs.
Banks play a critical role in the economy by making sure customers and communities have what they need to thrive. A national survey that ABA commissioned and released late last year found that banks are performing this role very well. Nine in 10 Americans are very satisfied or satisfied with their primary bank. Ninety-six percent rate their bank’s customer service as excellent very good or good, and 93 percent rate their access to banking services as excellent or good.
Beyond satisfaction, in an age of constant data breaches, consumers trust banks most to keep their information safe—more than double the share of Americans trust banks compared to the next-most-trusted industry. And as more and more Americans shift to online and mobile banking, 95 percent of Americans rated their banks’ online experience and mobile apps as good, very good or excellent, according to another Morning Consult survey done on ABA’s behalf.
Polling results like these matter because they give policymakers more reason to support the banking industry—and less incentive to make us a rhetorical or legislative punching bag.
Building on success
All of this puts us in an excellent position as we head into an election year that, yet again, could shift the balance of power.
As always, Americans will also vote on every House member and one-third of U.S. senators. We don’t know who will win control of Congress, but we do know that the intermediation of credit should not be a partisan issue, and it’s vitally important that we have a majority in Congress that recognizes this.
That’s why we will engage in 2020 congressional races—as we did in 2018 —with a goal of electing a pro-banking majority. The Republicans and Democrats we supported in the last election noted how effective our ads were in helping return them to Congress, and we are planning to even more active this year.
We are scaling up our BankPac and voter education initiatives—and expecting to invest more than $10 million—with the intent of supporting candidates in both parties who understand and appreciate the important role banks of all sizes play in this country.
And while we won’t participate directly in the presidential race, consistent with our history, we are watching closely. We stand ready to correct the record if candidates misrepresent our industry or pursue policies that will harm bankers’ ability to serve their customers and communities.
The common denominator in all our political and policy successes in the past year has been banker engagement. Bankers and state association leaders have stepped up in a big way. We’re grateful for everything our members have done to lead in our advocacy efforts—and to pave the way for bankers to serve their customers, clients and communities in 2020 and beyond.
Rob Nichols is president and CEO of ABA.